How to determine capital structure in Leveraged Finance?
Hi, I have an interview in Leveraged Finance coming up, and I'm still trying to understand the role and what they do exactly. So I have read some books on the topic, and they explain that a large share of what they do is LBO financing. The different types of debt/mezzanine are also described. But what I’m missing is: how do they determine how much of each type of capital they can issue? How do they determine this capital structure?
So my thought was that they just want to achieve the maximum,or the PE-desired, leverage and try to get it as cheaply as possible. And more junior tranches have to be in accordance with the covenants of the senior tranches. But I don’t know if that’s all. So when a LevFin banker should finance an LBO, how exactly does he do it?
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